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Abilene City Council reviews audit of hotel occupancy tax, organizations that benefit

In March, when the City Council authorized the audit on a 4-2 vote, objections were raised by council members Donna Albus and Weldon Hurt, both of whom voted against it. Albus called it a "put down" to the people who ran the organizations and Hurt said it looked like the council was not happy with the performance of the organizations. During public input on the issue, supporters of the organizations said an audit wasn't necessary, citing the awards Abilene tourism agencies and officials have won. Other council members said the audit would valid what the agencies were doing and determine their effectiveness. The audit was authorized on a 4-2 vote.

It's HOT in Abilene

Overall, the audit identified 19 findings across the four organizations, all of which receive hotel occupancy tax, commonly called HOT, revenues. The tax is mandated by state law on all sleeping rooms that cost $15 or more per day.

Abilene currently charges the 13 percent tax on sleeping rooms that cost $2 or more per day.

Hotel taxes must be spent on specific things, including: supporting tourism; attracting out-of-town events; promoting the arts; funding historical restoration and preservation; purchasing signage directing visitors to attractions hotel guests may frequent; and building and furnishing facilities hotel guests would use to gain information about the city they're in.

According to the audit, which studied figures from 2010 through 2016, tourism increased significantly in Abilene, with ACVB reporting an almost 35 percent jump in visitors between those years.

Events (and facilities) play a role

Why is tourism going up? The audit points out the city's increasing number of events, particularly ones with national and international draws.

First and foremost, the city's Children's Arts and Literacy Festival is playing a massive role for at least one weekend every June, the audit said. Abilene's nickname of "The Storybook Capital of Texas" also plays a role, as do the related Storybook Sculptures found around the city's downtown.

The Abilene Zoo was also cited in the audit, particularly the giraffe exhibit, as was the Taylor County Expo Center, the convention center and the Paramount Theater.

All of these played into the city realizing an increase of HOT revenues from $2.2 million in 2007 to $3.2 million in 2017, the audit said.

Convention Center

The Abilene Convention Center receives about 35 percent of HOT revenue generated, though it may be the source of the city's most questionable decisions regarding its expenses, the audit found.

Rozillis said the city may have mistakenly spent hotel tax revenues on events at the convention center that don't promote tourism.

According to the audit, about 56 percent of the total convention center events resulted in hotel stays. However, documentation of expenses doesn't provide a clear delineation between qualified expenses and unqualified ones.

The audit recommended setting up specialized accounts within the budgeting process to show a record of qualified expenses.

While this sounds like the city is out of compliance, Rozillis said that isn't necessarily the case.

"We're auditing to standard," she said. "The state's definition of these rules is squishy. When we contacted the state about this, they said it was up to every city to determine what expenses qualify."

Rozillis said the convention center was also dinged in the audit over the use of the facility. She said local events sometimes supersede non-local events, such as visiting conventions, that the city should be prioritizing due to HOT revenue possibilities.

Abilene Cultural Affairs Council

Four findings were identified in the audit of the Abilene Cultural Affairs Council, which receives about 15 percent of the HOT revenues annually.

Foremost, the audit found the organization did not isolate the HOT revenues from other sources of income. Rozillis suggested the council set up a separate bank account for its HOT funds.

Chamber of Commerce

One of the most vital findings in the audit was the need for the city and Chamber of Commerce to develop a new contract on how to share and distribute its hotel tax.

Rozillis pointed out the age of the deal, negotiated in 1981, in her presentation.

"It's not going to meet your needs in the future," she bluntly told the seven council members.

Distribution percentages were set up through the contract. It could become difficult to maintain such percentages if the city is successful in attracting a convention hotel downtown, a project that's in the works.

While the audit focused on HOT revenues and their usage, Rozillis also commented on the lack of a succession plan within leadership positions across the various organizations.

Chamber President Doug Peters said he's expecting each and every one of the management team, which includes Abilene Convention and Visitors Bureau Executive Director Nanci Liles and Abilene Cultural Affairs Council Executive Director Lynn Barnett, to be with the city for years to come.

"I know I've personally got another 15-20 years in me and I expect them to be there with me," Peters said.

Interagency collaboration

The audit also identifies a number of areas the four organizations involved in the collection of HOT revenue could work together to better promote tourism objectives, Rozillis said.

A five-year strategic plan, she recommended, would likely help the city leverage all of the organizations and help accelerate tourism growth even more than has been accomplished in the last 10 years, she said.

The city also needs to complete a new lease agreement with the T&P Depot downtown, the audit said.

Albus said the city needs to celebrate the findings of the audit, which she said supports the notion that Abilene is succeeding and properly handling its tax revenue.

"We need to have a parade to celebrate," Albus said. "I was against this audit. I felt it wasn't a good use of our money. But I think this says 'Way to go, Abilene.'"

"I stand corrected," she said as council accepted the audit with a 7-0 vote.